BIG3 co-founder Ice Cube.

The saga of the Fox regional sports networks (now owned by Disney, but not for much longer) has taken yet another twist. The BIG3, Ice Cube’s 3-on-3 basketball league that’s one of the remaining bidders here (albeit with them only putting in $350-500 million, with Carolyn Rafaelian, Centerbridge Partners, and Macquarie Group each committing $1 billion and the group “issuing debt” for the remaining $6.5-6.75 billion of their $10 billion bid), has now filed FCC complaints accusing cable provider Charter of “undermining the sale process” by refusing to carry the networks if the BIG3 group wins them.

Here’s more on that from Joe Flint of The Wall Street Journal:

In letters to the Federal Communications Commission and the Justice Department, Big3 Basketball LLC alleged that Charter’s conduct is depressing prices in the auction and suggested the situation could benefit Charter’s largest shareholder, Liberty Media Corp., which is also a bidder.

Big3 said it has engaged in negotiations with Charter over the price the cable company would pay to carry the sports networks should Big3 be the winning bidder. Big3 said the discussions broke down and it now fears the channels will lose carriage.

“Charter’s conduct risks effectively excluding Big3 from the bidding process and tainting the auction,” the company told the FCC. “It has been suggested to Big3’s ownership that Charter has disseminated its threat to drop the (regional sports networks) to other members of the industry, thereby suppressing auction prices, chilling bidding, and ultimately hurting Disney’s ability to secure the best price for the (channels),” the letter said.

A Charter spokeswoman had no immediate comment.

Why would the BIG3 be trying to negotiate carriage agreements before they even win the networks? Well, there are some pressing deadlines. As John Ourand noted at Sports Business Journal last month, Dish’s agreement to carry the RSNs ends this summer, and Charter’s ends this year. The deals with Verizon, Cox, Sling TV, YouTube TV, and Wide Open West also end in the next 18 months. But it’s curious that the BIG3 is making these moves on their own, as Ourand’s piece there noted that the networks’ current administration is already working on carriage deals:

Sources said that Jeff Krolik, the President of the RSNs, hired a team of experienced distribution execs on an interim basis to lead these negotiations. The group is led by former Fox and Time Warner Cable exec Mike Angus. Former Fox distribution execs Chris Killebrew and Steven Hunt also will be working on the negotiations on behalf of the RSNs. The trio has decades of experience in the business and has cut hundreds of carriage deals over their careers.

So negotiating on their own with Charter feels like a bit of an end run from the BIG3. Now, of course, if the BIG3 does win these channels, that may change the tone of carriage negotiations, but not necessarily because of ownership. The BIG3 content plans for these networks remain pretty vague still, but they sound incredibly different from anything anyone has ever tried with regional sports networks, as Bloomberg’s Nabila Ahmed and Scott Soshnick wrote last month:

While private equity firm Centerbridge Partners LP and jewelry maker Carolyn Rafaelian are financial backers of the bid, Ice Cube is teaming up with [Serena] Williams, Snoop Dogg, Kevin Hart and Michael Strahan’s SMAC Productions as content partners.

Big3 presented a plan to expand the Fox networks with 24-hour, culturally diverse national programming built around live sports, people familiar with the situation said this month.

…Rapper Snoop Dogg said Big3’s plans represented a new approach. “We’ve had the same ole people delivering us sport and culture forever and I join the movement because we’re here to change all that,” he said in a statement.

Williams said she’s backing Big3’s bid because “it’s so important to have diversity and new voices to deliver messages” to young people in a positive way. Rappers Nas and LL Cool J are also collaborators on the project.

Thus, the RSNs under BIG3 leadership could wind up looking a lot different than their current programming plans of focusing on live games with minor investments in studio programming, and could wind up with a lot more money invested in non-game programming. Forbes’ Madeline Berg wrote last month that “In addition to airing local NBA, NHL, and MLB games, as well as Big3 matches, they plan to create content that ‘puts more synergy in the world’ and attracts a diverse and young audience with talk shows, series focusing on the intersection of sports, culture and politics, and a premium take on a shopping network.”

That all sounds like it would cost more money than your typical RSN studio programming, and while they could make some back through higher ad rates if people actually watch it (which is a big if), a business plan here would probably also involve getting cable and satellite providers to pay a higher per-subscriber fee for these networks, under the argument of “Hey, we have more content now! It’s not just games!” But the plans for that content are vague, and the appeal of that content is certainly debatable, so there could be a lot of reasons for a provider like Charter to balk even before their ownership comes into it. (Oh, and it should be noted that the BIG3 presumably couldn’t even put its own games on these RSNs this year, at least not live; they already signed an exclusive deal with CBS and CBS Sports Network.)

Of course, this complaint can’t be written off entirely. We don’t know what exchanges the BIG3 had with Charter, and if they’re able to prove some sort of “We won’t carry these networks at any price if you win them,” that might lead to an actual result here. And we have seen the Justice Department and the FCC get involved with RSNs and with carriage disputes in the past; AT&T and DirecTV had to eventually settle a Justice Department lawsuit over collusion to not carry Spectrum SportsNet LA (the Dodgers-focused RSN), and Disney is only selling these RSNs as part of an agreement with the Justice Department to allow for their purchase of other Fox assets.

And while the BIG3’s bid has a lot of questions on many fronts relative to the ones from Liberty and MLB, especially when it comes to financing and programming, it may carry less potential antitrust issues. Liberty’s stake in Charter could matter, as could the involvement of multiple team owners with that bid, and a House committee raised questions about MLB and antitrust if they buy the networks. The BIG3 could wind up with its own antitrust problems as a league and a network owner, but given the limited scope of the BIG3, that may concern regulators less than a MLB or Liberty purchase.

Still, unless the BIG3 has rock-solid evidence that Charter is actively hindering them to boost Liberty’s bid and refusing to carry these RSNs at any price, this feels like a bit of a stretch at the moment. Many carriage deals don’t come together until the last minute (or afterwards, after providers or channel owners actually pull channels), so “You haven’t signed a carriage deal with us yet” doesn’t seem like much of an argument. And it would seem difficult for Charter to agree to carry these RSNs under BIG3 ownership when the BIG3 hasn’t won them yet, hasn’t revealed its programming plans in anything but general terms, and appears to be a longer shot to win the networks than the other two remaining bids.

It will certainly be worth watching to see if the FCC and/or the Justice Department feel there’s any merit to the BIG3 complaints here. If they do, that could throw yet another twist into this RSN auction, and it could boost the chances of the BIG3 actually getting these networks. But there’s also a chance that these complaints are just one more way for the BIG3 to get itself in the headlines, something it’s very good at. We’ll see how this plays out.

[The Wall Street Journal]

About Andrew Bucholtz

Andrew Bucholtz is a staff writer for Awful Announcing.